Shares of the ASX-listed Core Lithium Limited (AU:CXO) crashed over 10% today after the company announced a temporary mining halt in its update. The primary objective of this move is to mitigate increasing operational costs and explore strategies amid challenging conditions. The company informed its investors that it is suspending its operations in the Grants Open Pit to preserve cash.
In 2023, the Core Lithium share price experienced a significant decline of around 75%, primarily due to a sharp drop in lithium prices and a temporary slowdown in the demand for electric vehicles (EVs).
Core Lithium is an Australian mining company focused on the exploration of lithium, copper, uranium, zinc, and other minerals. The company owns 100% of Finniss Lithium Operation, which is located near Darwin and is the Northern Territory’s first lithium mine.
Core Lithium’s Strategic Review Update
In today’s update, the company mentioned that the price of spodumene concentrate, a high-purity lithium ore, has dropped by over 85% in the last 12 months, with around a 50% drop in the last two months. As a result, the temporary suspension of Grant Open Pit will reduce the cash cost of the Finniss operation. However, the company will continue to generate revenue through the processing of existing ore stockpiles.
Gareth Manderson, CoreLithium’s CEO, stated this was a “difficult decision.” The company said that it will closely monitor the situation, with the intent to resume mining operations when market conditions show signs of improvement.
Last month, the company suspended its BP33 underground development due to the beginning of the wet season and also mentioned that it was considering other strategies to preserve cash.
Is Core Lithium a Buy or Sell?
According to TipRanks, CXO stock has a Moderate Sell rating at an average target price of AU$0.37. The target price is 60% higher than the current level.
The rating is based on four Sell, one Hold, and two Buy recommendations from analysts.
